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PRENUPTIAL AGREEMENT IN DIVORCE PROCEEDINGS



The Department of Statistics Malaysia has recorded a whopping number of 43,934 divorce cases in Malaysia in 2021 which was a 7.1% decrease from the year prior[1]. It was said that failure to manage financial issues and conflicts between couples were among the factors contributing to divorce rate[2]. While no couple anticipates a divorce when they are entering into a marriage, having a Prenuptial Agreement drawn up may help to minimize disputes on division of property or financials in the event of a divorce.


A Prenuptial Agreement – or Prenup - is a written contract entered into by two people prior to getting married which primarily contained a list of assets each party owns and the distribution rights to assets in the event of a breakdown of marriage. Some Prenuptial Agreements may contain special clauses such as adultery clause or maintenance and/or custody of children to the marriage. A Postnuptial Agreement is similar to a Prenuptial Agreement, except that it is entered into after the couple is married.


Prenuptial Agreements are more commonly used in the West especially among the rich and famous. A few examples of celebrity couples who have signed a Prenuptial Agreement are Brad Pitt & Angelina Jolie, Beyoncé & Jay Z and Khloé Kardashian & Lamar Odom[3].


The statute governing matrimonial proceedings in Malaysia is the Law Reform (Marriage & Divorce) Act 1976 (hereinafter referred to as “the Act”). There is a misconception that Prenuptial Agreement is not recognized or enforceable in Malaysia. On the contrary, in every petition for divorce, parties can bring to the attention of the court the terms of any agreement in regard to the maintenance of wife and children of the marriage, or the division of any matrimonial assets, to enable the court to express an opinion as to the reasonableness of the agreement and to give such directions as it thinks fit[4].


Matrimonial Assets


Section 76 of the Act provides for the court’s power to order the division of matrimonial assets when hearing a petition for divorce. While the Act does not specifically define what matrimonial assets are, the Court of Appeal in the case of Ching Seng Woah v Lim Shook Lin[5] has referred to it as


“...matrimonial home and everything which is put into it by either spouse with the intention that their home and chattels should be a continuing resource for the spouses and their children to be used jointly and severally for the benefit of the family as a whole. It matters not in this context whether the asset is acquired solely by one party or the other by their joint efforts. While the marriage subsists, these assets are matrimonial assets. Such assets could be capital assets. The earning power of each spouse is also an asset.”


Previously, under Section 76 (1) & (3) of the Act, the Court when deciding the proportion of assets to be received by each party will first consider whether the assets were acquired by the joint efforts of the party or whether it was acquired by the sole effort of one party. This distinction has since been abolished by the Law Reform (Marriage & Divorce) (Amendment) Act 2017 where the court’s power to order the distribution of matrimonial assets is now extended to all assets acquired during the marriage[6]. The court may now consider the following factors when it exercises its power under the said section:-


  1. the extent of contributions made by each party in terms of money, property or work towards acquiring the assets or payment of expenses for the benefit of the family;

  2. the extent of the contributions made by the other party who did not acquire the assets to the welfare of the family by looking after the home or caring for the family;

  3. any debts contracted by either party for their joint benefit;

  4. the needs of any minor children to the marriage,

  5. the duration of the marriage;[7]


Properties that are gifted to one party during the marriage by a third party may be subject to division following the case of Chaw Anui v Tan Kim Chai[8] when read together with the amendments to the principal Act:-


“[106] … in Doris Howell v Put Jin Kong & Anor [1999] 1 AMR 476, the submission that the properties which were gifts and not subject to division was rejected by Ian Chin J, who relied on Chambers Concise Dictionary for the ordinary, natural meaning of the word ‘acquire’, ie ‘to gain or to get’ and concluded that ‘to have been vested with properties as a result of a gift or bequest’ would mean gaining or getting such properties which is a form of acquiring an asset with the meaning of s 76.


[107] On my part, I am in entire agreement with the conclusion of Ian Chin J. I would add that the terms ‘acquiring of assets’ and ‘acquired’ used in s 76 are not accompanied by any word of limitation, restriction or prohibition and so are intended to be free from any trammels. In the Concise Oxford Dictionary (9th Ed), the meaning of the word ‘acquire’ as ‘gain by or for oneself, obtain’; come into possession of. I am therefore unable to sustain the submission for the husband hold that there two bungalows are subject to division.”


It is worth to note that the court’s power to order the division of matrimonial assets in accordance with the express provisions in the Act will prevail over any terms contained in a Prenuptial Agreement. The Prenuptial Agreement may only be relevant to guide the court in ordering for a fair and reasonable award than what might have been ordered without one.


Maintenance of Wife and Children


In the case of Chaw Anui v Tan Kim Chai,[9] the High Court took into consideration several factors before making an order for the maintenance of wife, inter alia:-


  1. devotion of the wife;

  2. the unlikelihood of the wife to be gainfully employed elsewhere;

  3. health and medical needs of the wife;

  4. the husband’s financial means;

  5. the living standard of the wife; and

  6. the means and needs of the parties.


However, in the event there exists an agreement between the parties in regard to the maintenance of wife, Section 80 of the Act requires that the court’s approval be sought before any agreement in relation to maintenance for wife shall become effective. Nonetheless, the courts have the power to vary the terms of any agreement as to the maintenance made between the husband and wife, where it is satisfied that there has been any material change in circumstances and notwithstanding any provision to the contrary in any such agreement.[10]


Similarly, in regard to the maintenance of children, Section 97 of the Act provides that “the court may at any time vary the terms of any agreement relating to the custody or maintenance of a child, … where it is satisfied that it is reasonable and for the welfare of the child to do so.”


Conclusion


While the Malaysian Act does not have the same provision as Section 25(2)(g) of the English Matrimonial Causes Act 1973, Malaysian Courts have commonly dealt with agreements other than Prenuptial Agreements, such as the Deeds of Separation and Maintenance Agreements in divorce proceedings. As long as the terms of the agreements do not contradict the provisions in the Act and so long as the parties have entered into the agreement voluntarily with competent legal advice, it is our view that the Malaysian Courts may consider the Prenuptial Agreement or any agreements made between the parties to arrive at a fair determination of the intention of the parties with regards to the division of matrimonial assets and maintenance of wife and children.


[1] Departments of Statistics Malaysia, ‘Marriage and Divorce Statistics, Malaysia, 2022, 25 November 2022 <https://www.dosm.gov.my/v1/index.phpr=column/cthemeByCat&cat=453&bul_id=dWs0eGorT1RzSzNncFhqQlhIYXpOZz09&menu_id=L0pheU43NWJwRWVSZklWdzQ4TlhUUT09> accessed 28 March 2023

[2] ‘An Autopsy on Failed Marriages in Malaysia’ (The Star, 8 April 2023)<https://www.thestar.com.my/news/nation/2023/04/08/an-autopsy-on-failed-marriages-in-malaysia?utm_source=Smartech&utm_medium=email&utm_campaign=dailynewsalert&utm_content=20230408&__sta=vhg.uosvpxJBjlnkqjle%7CIFVY&__stm_medium=email&__stm_source=smartech> accessed 12 April 2023

[3] ‘Infamous Celebrity Prenuptial Agreements’ (Boyd Law) <https://www.boydlawlosangeles.com/infamous-celebrity-prenuptial-agreements/> accessed 28 March 2023

[4] Section 56 & 57(1)(e) of the Law Reform (Marriage & Divorce) Act 1976

[5] [1997] 1 MLJ 109

[6] Section 6(a) & (c) of the Law Reform (Marriage & Divorce) (Amendment) Act 2017

[7] Section 76(2) of the Law Reform (Marriage & Divorce) Act 1976 read together with Section 6(b) of the Law Reform (Marriage & Divorce) (Amendment) Act 2017

[8] [2004] 4 MLJ 272 (HC)

[9] ibid

[10] Section 84 of the Law Reform (Marriage & Divorce) Act 1976


Authored by Tiffany Ding

Edited by Kevin Wu


Kindly note that this legal article does not, and is not intended to, constitute formal legal advice by the Firm, instead all information, content and materials available on this site are for general informational purposes only. If readers require further clarification or legal advice, please email office@kevinwuassociates.com


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